You can see DXY has been falling since late 2016. It’s now at a three-year low.

More importantly, it just broke a major support level. This level is a giant air pocket.

In other words, the dollar could go into free fall from here.

And there’s a good chance that it will happen…

• That’s because the U.S economy is weak…

You might find this hard to believe. After all, the U.S. economy is growing twice as fast as it was a year ago. And the unemployment rate is at its lowest level in 17 years.

But I don’t mean weak in an absolute sense. I mean relatively weak.

You see, the European Union (EU) just had its best year of economic growth in 10 years.

Japan, on the other hand, is headed for its longest economic expansion since 2001.

Then there are emerging markets (EM). These are countries that are on their way to becoming developed nations like the United States. And right now, major EMs like China and India are growing more than twice as fast as the U.S.

In short, the U.S. economy is not doing nearly as well as the other major economies around the world.

The evidence is everywhere. Just look at this chart. It shows the performance of the CurrencyShares Euro ETF (FXE). This fund is designed to track the euro, the official currency of the EU.

You can see the euro’s up 17% over the past year. It also just broke through resistance that’s been in place since last August.

This is highly bullish for the euro. That’s because resistance levels are where bears and bulls duke it out. If the resistance is broken, it means the bulls have won the battle. That asset will likely keep rising.

That’s not good for the dollar.

• You see, the currency market is a zero-sum game…

When one currency strengthens, another must weaken.

In short, a strong euro means a weak U.S. dollar. Not only that, the euro is by far the biggest component in DXY. It makes up 58% of the index.

That’s not the only reason you should be worried about the dollar, either.

• Traders are also betting on a stronger Japanese yen…

You can see what I mean below.

This chart shows the performance of the CurrencyShares Japanese Yen ETF (FXY). This fund tracks the Japanese yen against a basket of currencies.

Two things jump off the chart here. Number one, FXY has put in a bottom at just over $84. Number two, FXY just broke out of a downward wedge.

This suggests that the yen is in the early stages of a new uptrend. And that, too, is not good for the dollar.

This is because the yen is the second-largest component in DXY. It makes up 14% of the index.

And like the euro, a stronger yen makes for a weaker U.S. dollar.

This is happening because money goes where it’s treated best. And right now, traders see better opportunities outside the States.

Unless this changes, the U.S. dollar will continue to struggle.

• That’s bad news for everyday Americans…

It means the money in their pockets won’t go as far.

The good news is that you can hedge yourself against a weak dollar. One way to do this is by going “long” foreign currencies like the yen or euro.

There’s also another way to profit from the weak dollar, which I’ll share on Monday… one with massive upside.

Stay tuned…

Regards,

Justin Spittler
Denver, Colorado
January 19, 2018

Reader Mailbag

You’re missing the fact that there have been a number of hacks into bitcoin and other cryptocurrencies, and further, that cryptos charge "real" money (currencies for their bit-money). Who gets that, and if they don’t believe in currencies, then why would they accept payment of fraudulent fiat currency?

—Tom

Cryptos are air. Nothing behind them. Created out of thin air. No government behind them. They are a Ponzi scheme and scam. Stop promoting scams, you swarthy ingrates.

—Patrick

If bitcoin is so safe and records of each transaction are kept in so many different locations, how do millions of dollars of bitcoin get stolen and can't be recovered? It seems that they should be able to be traced very easily?